Nearly 120 more law firms closed in 2008 than in 2007, while four fewer firms opened, Solicitors Regulation Authority statistics show. Despite more firms closing down, 889 new practices were opened in 2008, while 442 closed that year.

An SRA spokesman said: ‘The number of firms is only one indicator of the health of the profession. Nobody knows how many solicitors are actually working profitably, or just hanging on by their ­fingernails, or contemplating unemployment or insolvency.’

The statistics also show that the number of sole practitioners and traditional law firm partnerships in England and Wales has declined steadily over the past three years (see graph), while limited liability partnerships and incorporated companies have increased.